News Now

Washington

Mica urges Senate opposition to interchange bill

WASHINGTON (6/9/08)—Each member of the U.S. Senate was urged by the Credit Union National Association (CUNA) Friday to oppose legislation that would insert government interference into a free-market system that works well—the setting of credit card interchange fees. In a June 6 letter, President/CEO Dan Mica noted CUNA’s disagreement with S. 3086, the Credit Card Fair Fee Act, introduced last week by Sen. Richard Durbin (D-Ill.). (See related story.) Mica noted that the bill would establish “a costly governmental tribunal that would be authorized to impose its decisions on a system that is more appropriately governed by the market.” CUNA has voiced opposition to a similar bill introduced in the House by Rep. John Conyers (D-Mich.). “While proponents of S. 3086 argue that interchange fees are becoming an increasing burden on their ability to do business, we believe that the current payment processing system directly contributes to the success of the retailer in guaranteed payment, increased sales, and the ability to competitively contract for payment processing services,” the CUNA letter argued. Mica pointed out that under the current fee system, 1.4 million merchants change acquiring relationships each year, in large part because of price shopping. “The number of options available to merchants and the fact that they actively change processors to get the best price available provides clear evidence that the payment processing system is competitive and the market is working,” Mica wrote. The CUNA leader also refuted the argument that legislating interchange fees would benefit consumers. “Government-imposed price controls on interchange fees are more likely to increase credit and debit card costs that consumers bear, and make convenient credit less available. “The uncertainty surrounding this legislation makes it unlikely that consumers will see any benefit. We urge you to oppose the legislation, Mica concluded.